Any manufacturing facility that uses wood as a raw material—sawmills, pulp & paper mills, panel mills, pellet mills, as well as biofuels and biochemicals producers—relies in large part on the availability of affordable and sustainable feedstock for its long-term success. Prior to siting a new facility, or even deciding whether to purchase a closed or operating facility, due diligence requires that the project developer seek verification that adequate feedstock can be procured from the supply region for the life of a project. This verification is a complicated process, however. For project developers, there are five steps that, if followed, will determine whether a particular location will support the project and improve the chances of project success.
1) Quantify current forest inventory, annual forest growth, and annual consumption in the supply area
To quantify current forest inventory, knowing the total number of tons, MBF or cubic meters of growing stock that resides in the forest is not enough. Why? Total forest inventory is not always synonymous with the supply available to commercial operations. As a result, it is necessary to distinguish between current forest inventory and the inventory available to consumers of wood raw materials. Geographical (steep terrain, weather, etc.) and economic challenges can both preclude the timber in a specific area from being harvested. By looking at this total over the most recent five-year period, annual growth rates can also be ascertained.
Once the volume of commercially-available timber and the annual growth rate are calculated, the next stage is to establish current harvest volumes by following this process:
- Identify all competitive facilities that consume wood raw materials in the supply area.
- Determine how much wood each facility consumes annually. Using actual consumption numbers—not production capacity numbers—is important, as mills tend to run at less than full capacity.
By adding the total current consumption and the expected consumption of the new facility, and subtracting this number from the annual growth number will provide a snapshot of whether sufficient supply to sustain operations currently exists.